What are the 3 Challenges and Predictions for Bitcoin Mining?
Matthew Lam May 24, 2019 12:00
Various blockchain and financial professionals joined our event “Can Bitcoin Sustain Its Positive Price Run? How does it affect miners?” on 23 May 2019 held in Genesis Block, Hong Kong. This event looked at the current investment landscape and regulatory challenges on Bitcoin mining and a hot topic for all BTC holders: What is the price of Bitcoin going forward?
Various blockchain and financial professionals joined our event “Can Bitcoin Sustain Its Positive Price Run? How does it affect miners?” on 23 May 2019 held in Genesis Block, Hong Kong. This event looked at the current investment landscape and regulatory challenges on Bitcoin mining and a hot topic for all BTC holders: What is the price of Bitcoin going forward?
The night commenced with the introduction of the Crypto Asset Federation (CAF) and Blockchain.News, followed by keynotes and panel discussions on Bitcoin price run and its impact on mining.
JoAnn Yip, Vice President of the Crypto Asset Federation (CAF), delivered the key mission of CAF: To promote crypto assets as a viable institution-grade investment class
Yulande Choi, Marketing Manager of Blockchain.News, explained the diversity of blockchain contents from three main sources: exclusive interview with crypto leaders, blockchain columnists worldwide and in-house research team.
In the first keynote session, Cynthia Wu, Investment Director of Bitmain first outlined the evolving needs of miners. She indicated that miners nowadays look for sophisticated financial services to generate liquidity for the coins they mined, such as spot trading and custody services, derivatives and asset management services.
Cynthia then illustrated the relative scale of mining market against other financial services in cryptocurrencies. The daily PoW mining reward and transaction fees amounted to approximately USD 25 mn and total asset under custody is less than USD 20 bn.
Cynthia predicted that the market for financial services will receive a massive boost by 2021, especially in custody and derivative trading. The custodian and derivative trading market are estimated with a total of USD 400 bn and a daily turnover of USD 120-150 bn, an 20x estimated increase than where we are today!
In the second keynote, David Tang, CEO of Standard Kepler concluded the current state of mining with 3 challenges and 3 predictions:
1st challenge: The rise of PO”X”
Prediction: Truly decentralized blockchains will struggle, cryptocurrency will become less minable
2nd challenge: Censorship resistance and regulation
Prediction: Miners will need licenses in order to help government to impose regulation on crypto
3rd challenge: Tradeoffs in public and private blockchains, in terms of degree of decentralization
Prediction: Less mining opportunity as private blockchains continue to grow
David presented the 3 key challenges and predictions for mining going forward.
In the first challenge, David concluded that cryptocurrencies are less minable if they adopt a more scalable consensus algorithm.
David made a bold prediction that regulation on mining will be tighter due to many sensitive information and illegal transactions involved in the mining process.
In the third keynote, Pius Lam, CEO of Batmine first mentioned the impact of Bitcoin halving every 4 years on the production per block. He indicated that the price of Bitcoin went up over 30 to 90 times within a year when each Bitcoin halving occurs.
Pius Lam explained the relationship between Bitcoin halving and production per block.
He concluded his speech with an interesting example: Mining is like buying a chicken which can lay eggs; Buying BTC is like buying the egg.
Moderator and Panelists (From left to right): Matthew Lam of Blockchain.News, Ray Wong of LuTech, David Tang of Standard Kepler, Pius Lam of Batmine and Cynthia Wu of Bitmain
There are 4 panelists in the panel discussion:
1) Cynthia Wu, Investment Director of Bitmain
2) David Tang, CEO of Standard Kepler
3) Pius Lam, CEO of Batmine
4) Ray Wong, Co-founder of LuTech
Moderator: Matthew Lam of Blockchain.News
Matthew first mentioned the institutional demand rose in BTC investment and mining this year, with Fidelity’s plan to launch crypto trading desk and Bitfury’s BTC mining fund launched for institutional investors. All panelists agreed that the proposed mining ban by the National Development and Reform Commission (NDRC) has very limited impact on BTC mining and they foresee that miners will start moving out from China to other regions of the world.
Panelists further discussed the future of the concentration of Bitcoin mining pools. Cynthia Wu of Bitmain said that BTC mining pool’ distribution tends to be decentralized in the future as miners have very low switching cost to one mining pool to another. All panelists agreed that there are 3 main criteria in choosing the mining location:
1) Taxation treatment of the country in BTC mining
2) Weather conditions
3) Electricity expense/costs
Last but not least, the panelists explored the future of BTC price with our audiences. All panelists remained optimistic in BTC price going forward, yet they won’t be surprised if there is price correction of BTC in the short term. Panelists believe that the approval of Bitcoin ETF and growing institutional demand in cryptocurrencies will be the 2 key drivers in BTC price.
The event ended with engaging Q&A and networking sessions, as well as laughter from all participants and nice craft beers!
Image source: Shutterstock.jpg)